India is a country that loves gold. Indians are the largest importers of gold in the whole wide world. This precious metal is not only useful as an ornament to be worn at festivals but a good gift option as well. These days banks and non-banking financial institutions are offering loan against gold.
Gold loan is granted by a lender against the gold that is kept as mortgage and hence, this loan is a secured loan. The gold needs to be deposited with lenders before the loan is availed. The lenders will conduct a few checks and may offer loans for as high as 80% of the metal’s value. Most households in India have at least some gold at their home or in a bank. They can utilize this loan to meet emergency requirement of funds such as expanding a business, a medical emergency, child education or even for down payment to purchase a vehicle.
The various benefits of applying for a gold loan are:
• As the gold loan is a secured loan, banks are generally non-hesitant in granting it. Banks or other financial institutions always have the option of selling off the gold in case of any default on the payment.
• Banks or financial institutions may even allow a person to only pay the interest for the loan. The person can pay back the principal amount at the end of the tenure.
• Gold loan interest rates are generally lower in comparison to the interest rate that is charged by a bank or a financial institution on any unsecured loan. Thus, this provides some relief to the borrower.
• As the gold is kept as collateral, a person is eligible for a loan against gold even if his/her credit history is not so commendable. A person’s repayment capacity is also not considered. Thus, it is often easier for a person to avail a gold loan to meet his/her urgent requirement of money.
• Lenders also generally do not ask for an income proof to be submitted by the borrower. This is because the physical gold is kept with them.
• A person availing such a loan does not generally lose ownership of the gold that he/she is mortgaging. He/she will get it back after repaying the loan.
• Many banks and non-banking financial companies charge less or no penalty for prepayment of the loan. Sometimes, they do not even charge processing fees. Thus a borrower is not overburdened with the task of paying more money.
In India, the government has also made it easier for women and agriculturists to get gold loan by announcing special goal loan schemes. Gold assets usually increase in value and hence, it is easier for lenders to trust a person who wants a loan against gold. These are the reasons why gold loan is a popular option in India.
Gold loan is granted by a lender against the gold that is kept as mortgage and hence, this loan is a secured loan. The gold needs to be deposited with lenders before the loan is availed. The lenders will conduct a few checks and may offer loans for as high as 80% of the metal’s value. Most households in India have at least some gold at their home or in a bank. They can utilize this loan to meet emergency requirement of funds such as expanding a business, a medical emergency, child education or even for down payment to purchase a vehicle.
The various benefits of applying for a gold loan are:
• As the gold loan is a secured loan, banks are generally non-hesitant in granting it. Banks or other financial institutions always have the option of selling off the gold in case of any default on the payment.
• Banks or financial institutions may even allow a person to only pay the interest for the loan. The person can pay back the principal amount at the end of the tenure.
• Gold loan interest rates are generally lower in comparison to the interest rate that is charged by a bank or a financial institution on any unsecured loan. Thus, this provides some relief to the borrower.
• As the gold is kept as collateral, a person is eligible for a loan against gold even if his/her credit history is not so commendable. A person’s repayment capacity is also not considered. Thus, it is often easier for a person to avail a gold loan to meet his/her urgent requirement of money.
• Lenders also generally do not ask for an income proof to be submitted by the borrower. This is because the physical gold is kept with them.
• A person availing such a loan does not generally lose ownership of the gold that he/she is mortgaging. He/she will get it back after repaying the loan.
• Many banks and non-banking financial companies charge less or no penalty for prepayment of the loan. Sometimes, they do not even charge processing fees. Thus a borrower is not overburdened with the task of paying more money.
In India, the government has also made it easier for women and agriculturists to get gold loan by announcing special goal loan schemes. Gold assets usually increase in value and hence, it is easier for lenders to trust a person who wants a loan against gold. These are the reasons why gold loan is a popular option in India.
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